Have not filed Japanese tax for the past 9 years

[johnnyfred1]

As a Japanese citizen with U.S. permanent residency who retired in 2013. I spent approximately 9 to 10 months each year in Japan and the remaining 2 ~ 3 months in the U.S. from 2013 to 2022. For 2023, I was in the U.S. for almost 11 months.

From 2013 to 2022, I consistently filed U.S. tax returns as a resident but unintentionally didn't file Japanese tax returns. I realized this when consulting with a certified accountant (公認会計士) on another matter in Japan. She mentioned that, for tax purposes, I'm considered as a Japanese resident (2013-2022) and should have been filing Japanese tax returns. My income includes social security benefits and proceeds from annual ETF sales from my 401k and Roth IRA. Since my retirement in 2013, I haven't worked in either Japan or the U.S. The certified accountant will assess my situation to find the most cost-effective solution to fix the problem, but has anyone in the community done something similar to what I did, and if so, how did you resolve the issues? Could you please share your experience?

Thank you

 

[pauldevereux]

@johnnyfred1 Please tell us what your certified accountant determines. Thanks!

 

[johnnyfred1]

@pauldevereux She mentioned that I might not need to file Japanese tax returns for 2013, 2014, 2015, 2016, 2017, and 2018, as the 5-year statute of limitations has passed. She also noted that, even in the case of tax evasion (with a 7-year statute of limitation), my situation may not apply since I've consistently paid taxes in the U.S. There was no intent to evade taxes. I inquired about staying in the U.S. to avoid becoming a Japanese resident for tax purposes, and she explained that the statute of limitations would continue running. Eventually, the statute of limitations on 2019, 2020, 2021, and 2022 Japanese tax returns would also pass.

 

[jsgringo]

@johnnyfred1 how are you a Japanese tax residence? If you are retired and live in the us you are not taxed in Japan but the us. what do you mean with "spent about 9 months in Japan" ? is that for one year or from 2013 till 2022 ?

 

[johnnyfred1]

@jsgringo It was unclear. Edited my comment. I was living in Japan for 9 ~10 months every year from 2013 to 2022.

 

[adkp]

@johnnyfred1 If you were a tax resident of Japan for those years (which seems likely, but I'm not an expert) then you probably owe Japanese income tax for those years.

On the flip side, being a Japanese tax resident almost certainly means you were not a US tax resident and therefore using FTC you probably didn't owe tax in the US for those years, or very minimal amounts of tax. After so much time has passed I am not sure if you can get your US tax back for all the years but you might be able to get it back for some of them. You will need to work with an accountant in the US, too.

 

[johnnyfred1]

@adkp Thank you for your advice. I will need a U.S. CPA's help for sure. The simplest way to resolve my problem is probably just to stay in the U.S. and let the statute of limitations pass, I guess.

 

[harpgal]

@johnnyfred1 Did you owe tax the years you filed in the US? It looks like you will also need to refile your US returns for the past three years as well (possibly two (2021/2022) depending on when you paid your last US tax bill).

If you did pay tax those 2/3 years, you could get that back to apply against Japan tax owed. Did you your CPA indicate the NTA statue of limitations? Can you make an offer in compromise?

 

[johnnyfred1]

@harpgal No tax is owned in the U.S. I have filed U.S. tax returns since 2013. I have not talked to a CPA yet, but I need to do that. I talked to a certified Japanese accountant in Japan.

 

[fabienne]

@johnnyfred1 Did you reside and pay Japan taxes before 2013? Do you still have a residence in Japan that you were using for 9/12 months per year.

https://taxsummaries.pwc.com/japan/individual/residence

 

[johnnyfred1]

@fabienne I lived in the U.S. before 2013. I don't own any property in Japan. I resided in my parents' house between 2013 and 2022 so I had a jusho as my parent's house was my primary residence at that time.

 

[fabienne]

@johnnyfred1 It sounds like you are a permanent Japan resident taxpayer and would be even if you were not a Japanese citizen.

 

[steve1225]

@johnnyfred1 I also need financial guidance on a matter such as this. Anyway you could direct me to where you found your advisor, or tell me how you found them?

 

[johnnyfred1]

@steve1225 Japanese certified accountant or 公認会計士.

 

[ethzz]

@johnnyfred1 A side note: I think the NTA here will only be concerned with the previous five years, but I'm not sure how they count this with regard to 2023 as a tax year. If it is not counted (probably not), then you'd be filing for 2022, 2021, 2020, 2019, and 2018.

 

[ethzz]

@johnnyfred1 Another discussion on residency/domicile.

 

[msulli]

@johnnyfred1 In many countries, where you're considered a tax resident is based on how many days a year you spent there, often it's around 183 days (i.e., more than half), then you're expected to pay tax. It seems you spent more than that for each year between 2013 and 2022.

The US also has some kind of rule like this (am not American so don't know details). As you spent very little time in the US in those years perhaps you didn't need to pay US taxes and do need to pay Japan taxes, but also JP & US have some kind of mutual tax deal. You probably need a tax expert to help here, but these could be directions to look in.

 

[johnnyfred1]

@msulli Thank you for your input regarding the 183 days rule. I spoke to an acquaintance, a U.S. accountant (not a CPA), about this. He mentioned that the IRS might not be concerned about whether I lived in the U.S. for at least 183 days, as long as I paid the correct amount of tax. I need to make sure about this issue.